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Economic Reality, The Perfect Storm Continues to Rage
Reality hurts. I write a lot on what I call “feel good” reporting or reporting through “rose colored” glases. My concern with this type of reporting is that hiding the truth does the American people a disservice. Telling us that the economic situation is beginning to get better, that the worst is over and a recovery is on its way, only leads to erroneous financial planning on the part of already strapped Americans.
By coloring the truth, presenting it in unrealistic but optimistic manners, only leads to a longer cycle of recovery. As in any recovery process, be it alxoholism, drug addiction, spending additction or economic crisis, no recover is possible until admission of the problem is verbalized and faced head on. Read More... Posted by Larry Rubinoff August 18, 2008
Mortgage News Daily Reports…The Truth On the State Of Our Economy
I frequently refer to “feel good” reporting by most of our media and specifically our government. Feel Good reporting is telling the public what they would like to hear not what is really is.
The government, special interest groups and primarily main stream media believe that if we think it is ok it will be ok. They believe that the truth would create a panic and make things even worse.
Every now and then there is a publication that does not function in that manner. Mortgage News Daily is one of them. Here is the link to one of their most recent reports:
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Posted by Larry Rbinoff August 7, 2008
H.R. 3221: Foreclosure Prevention Act of 2008
American Housing Rescue & Foreclosure Prevention Act
By Larry Rubinoff
August 5, 2008
It passes overwhelmingly in the House and Senate. President Bush did not hesitate to sign it into law. It is now law. Public Law No: 110-289 [GPO: Text, PDF.
We hear bits and pieces of what this law is. It is being promoted as a rescue to homeowners of this country facing foreclosure. But is it really? Read More...
The Truth about Wall Street By Larry Rubinoff as published in Flippingfrenzy.com Sunday, July 27, 2008
I recently wrote an article in Flippingfrenzy.com where I am featured from time to time as a Guest Writer.
I often just link to these posts but this one needs to be re published here as posted. When he speaks in public, President Bush usually talks in a very measured tone. Yet late last week, at a private fundraising event in Houston, Texas, the President was more candid than ever before about the state of the U.S. economy: Read More...
Indymac, The Tip of the Iceberg By Larry Rubinoff Saturday, July 19, 2008
It is being called the second biggest bank failure in our nation’s history. It is very reminiscent of the S & L debacle of the 80’s. This could very well be just the tip of the iceberg.
The facts and implications of this failure may well translate to other financial institutions and indeed in some way affect all of them. We may well be seeing the end of large national banks and a return to smaller regional banks working within their communities and on behalf of their communities. Read More...
Not Just a Sub Prime Problem…Sub Prime Mortgage Brokers Not to Blame
By Larry Rubinoff
July 11, 2008 Many months ago, when everyone was calling this a sub prime mortgage meltdown, I predicted that the problem went far beyond sub prime. I very clearly stated that our two Government Sponsored Enterprises (GSE), Fannie Mae and Freddie Mac, would have the same if not more foreclosures, suffering financial losses that could bankrupt them.
In my guest posts on Flippingfrenzy.com, “The Credit Crisis - Subprime Mortgages and Various Idiots”, posted February 9, 2008, I said,... Read More... Fraud Permeating Our Society
By Larry Rubinoff
Updated July 8, 2008
Fraud is permeating our society today and is not limited to the real estate and mortgage industry.
Unfortunately, these industries make up a large part of our economy and become a major focus point and as such require more reporting and investigation. My writings are meant to open minds, to ask questions and to seek the truth.
Fraud comes in many flavors - premeditated, unintentional, uninformed and uneducated, none of which makes it right or lessens the end result. It is also committed by average citizens and high rankingcorporate and government individuals. Read More.....
Coming Soon....Foreclosoure Fraud How to spot it and What to do.
Economic News We Don't See In The U. S.
Posted by Larry Rubinoff June 29, 2008
As most Americans continue to feel the impact of the economic slowdown, the true impact of our condition is not fully disclosed by U. S. media. Depending on the media source, information is biased towards the source's own interests.
The National Association of Realtors (NAR) tends to want to keep reports optimistic. Their interest is to promote sales for their members, the realtor. Indeed, many reports they issue attempt to accomplish this.
Our major media outlets such as Fox News, CNN, NBC, CBS, ABC with all of their cable affiliates tend to report based on their views and probably those of their advertisors. After all, if conditions are reported to be as bad as they are, many would not purchase the products advertised.
Read More.....
Need your comments and feedback June 13, 2008 I value your comments and opinions. I do not update this site daily. If those of you visiting here would like to see daily updates, I will certainly to so. Also, do you like the new format for each story that links you to the full story on my blog site? Please let me know by contacting me...click here Thank you Larry
Fraud Forensics and Celebrity Foreclosures Posted by Larry Rubinoff June 11, 2008
In a recent post on FlippingFrenzy.com titled "Real Estate Fraud and Celebrities in Foreclosure", it's author, who I do respect, alludes to the fact that some multi million dollar celebrity owned homes in foreclosure could stem the tide of an entirely new arena for mortgage fraud. Pleae go to the link above and read the article.
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Are We Alright? America Needs to Speak Out!
Posted by Larry Rubinoff
May 15, 2008 While this is primarily a mortgage information blog, a departure for this post is important.
Are we alright? Where do we as a country and a society stand in terms of economy and way of life? Questions I believe every American is thinking about. Read more...
Fannie Mae by any other name…would be prosecuted Posted by Larry Rubinoff April 25, 2008 If Fannie Mae were simply XYZ Mortgage Company it would have been investigated by the FBI, criminal wrong doing charges filed with stiff prison sentences possible. Read more...
The Perfect Economic Storm
An Editorial Comment Posted by Larry Rubinoff April 15, 2008
We are in the midst of the “Perfect Economic Storm”. Beginning with the mortgage meltdown, we are now experiencing a meltdown of our entire economic system.
The storm manifested itself by large financial corporate giants changing the tried and tested rules of lending, unleashing a virtual swell of money upon the populace-a sunami. The country was litterally swept under by its strong currents while distracted by the sunshine-the calm before the storm.
Citizens of this country have been victimized as never before. The economy, fueled by rampant fraud, claimed and is still claiming many victims.
Economic Facts:
• The dollar is weakening against all major currencies
• Inflation is rising (food, gas, utilities, etc.)
• Liquidity is evaporating
• Unemployment rising
• Credit defaults in all sectors of the economy increasing (home foreclosures, car repossessions, credit card defaults)
• Municipalities and services diminishing due to reduced tax base
Driven by greed, many of our trusted, venerable financial institutions were able to create willing and unwilling co- conspirators in schemes to envelop the entire nation. One such venerable firm, Bear Stearns is a good example. They created many of the sub prime
programs that caused so much of this crisis. They were not concerned with promoting the American Dream of homeownership, just with securitization and profiteering. The more mortgages they could create the more securities they could create and sell. Coupled withfalse “AAA” ratings by rating agencies, Bear Stearns sold billions of dollars worth of mortgage “paper” to even more innocent investors including municipalities, pension plans, governments and even other banks. Indeed, they even bouthg the paper themselves. (Reminiscent of what happened during the Great Depression)
They perpetuated the storm by continually lowering qualifications, guidelines anunderwritingstandards. They gave a loan to anyone who had a pulse. This was great for the populace and great for them as well. Many in the real estate and mortgage industry profited as too. We all sailed in the sunshine, unaware of the storm that was looming. Our dockmaster (Bear Stearns and other Wall Street banks) told us there was plenty of clear sailing ahead.
Now insolvent it appears that we, the people (victims), are going to bail them out.
J. P. Morgan Chase comes to the rescue of Bear Stearns with an assist from our government (tax payer’s money). They to put up a little over 253 Million Dollars and the tax payers will put up 30 Billion Dollars. Government bailing out one corporation with the intent of enriching another while millions of tax payers are losing their homes at record levels. Debate goes on and on in our Congress, FHA and Oval Office. No definitive solutions, just talk, more talk and more feel good press releases. How long did it take for government to come u with the BS (Bear Stearns-pun intended-bail out?
This rescue plan was formulated over just one weekend while after months of debate, our legislators have no concrete proposals or solutions to help stem the tide of the storm for the average American.
There will be more shake ups on Wall Street - Lehman Brothers, Merrill Lynch and even GoldmSachs
as this storm matures. Others, including FHA, Fannie Mae and Freddie Mac are financially strained. Will our tax dollars save them as well? And if so, where will all this funding come from?
Government Bailouts of large corporations do not help the average American. 30 Billion Dollars infused into the mortgage system could help bail out many home owners, reduce their negative equity, make refinance a possibility allowing more home owners to keep their homes and pay for them. Reducing the number of foreclosures and vacant properties would help stem the tide of this storm. Stabilizing values and injecting cash back into the economy through payment of principal, interest, tax and insurance does more for America then keeping Bear Stearns in business or adding another asset to J.P. Morgan Chase.
But the storm continues to rage. “I want it all and I want it now. Check your credit card balance on your cell phone and decide what you can spend”. A TV commercial now being aired by one of our larges financial institutions, who is also in distress.
In other words, max yourself out, spend money you don’t have-perpetuate The Perfect Economic
Storm.
The “I want it all and want it now” philosophy is what got us to this crisis in the first place. It matters not if the debt created is in housing or on plastic. It only serves the banks profiteering at the expense and devastation of the consumer. Credit cards are already at an all time high default rate.
Credit card debt is securitized just as mortgages are. The more you charge the more “paper” the bank can create, securitize and sell to more unwitting investors around the world-The Perfect Economic Storm.
Preying on the average American for higher corporate profits and higher stock values is a fraudulent policy. In the end, you will not be able to pay for that new big screen TV, your debt will be written off by the bank, you may be forced into bankruptcy, the investors around the world will lose their money and a new cycle of economic problems begin-The Perfect Economic Storm.
In one of my previous posts in Flipping Frenzy, The Credit Crisis - Subprime Mortgages and Various
Idiots, I say: “This is yet another example of borrowed funds used to loan to other borrowers who would loan to other borrowers.” That post, quoting the writing of Richard Whitworth is even more relevant today then it was then.
What’s good for America is what’s good for Americans. Any effort to save a corporation should include measures for that company to give back to those they helped put into peril. A pay it forward concept. I help you; you repay me by helping someone else. A novel idea introduced as the theme of a movie some years ago.
As the economy weakens, desperation increases leading people to acts they would never have thought of performing. Desperation is as much a motivator for fraud as is greed. We have seen what greed has created, let us not see what desperation can and will do. The storm will continue to rage until we can get back to a normalized business and spending environment, a free market with more oversight on large corporations, their activities and business practices. No government-tax payer- funded bailouts while their executives walk away with hundreds of millions.
Americans have exhibited the ability to come together during emergencies and disasters. Note, I said Americans not the government. This is a National Emergency and Disaster of epidemic proportions. We need to come together now. This storm is destroying households and people, our way of life and this great nation of ours. I speak out to individuals to stand up and speak out. To corporate America I say "how much is enough profit when your profit taking is at the expense of the people and our nation as we know it? Together we can survive-The Perfect Economic Storm.
Increased FHA, Fannie Mae, Freddie Mac Loan Limits….Not For Everyone
Posted by: Larry Rubionff March 10, 2008
Raising loan limits for FHA, FANNIE MAE and FREDDIE MAC has been hyped for the past few months.
We all have anxiously been awaiting the results. The talk of the industry was that limits would be increased to an unprecedented $729,750 and would offer refinance solutions and new purchase possibilities to tens of thousands around the country.
The loan limits that have been in place were $271,050 for FHA and $417,000 for Fannie/Freddie, certainly inadequate for much of the housing market. An increase to $729,750 (believed to have been for all three agencies) would have certainly helped to alleviate the delinquency and foreclosure rate not to mention spurring the real estate market in general.
So the wait began. Realtors were telling their clients to wait for the ability to get a jumbo loan (over $417K) at conforming rates. Other buyers, such as first time homebuyers, limited credit individuals or people with lower then conforming credit scores also waited to buy affordable interest rate loans through FHA. All in anticipation of the $729,750 loan limit.
Even though this is a temporary increase expiring on December 31, 2008, a lot of good can be accomplished in that period of time. I was optimistic that with all the positive results that would have occurred, they would extend these increases into 2009 thereby stabilizing the market even more.
The news is out. FHA has completed its study of “high cost” counties in the country. They have announced the “new” loan limits which also will be used by Fannie and Freddie.
The information is now available and you can see what the loan limits are for your area by going to this link: FHA LOAN LIMITS.
Here is a summary of what is on the very first page/list of areas: (For the entire list, just scroll to the bottom and press "send". The list will default to FHA limits. You can change that to Fannie/Freddie limits by clicking on the drop down box. For your county, just type in the counry name.
| FHA TOTALS | Fannie/Freddie TOTALS | 34 counties at $271,050
2 counties at $729,750
1 county at $273,750
7 counties between $273,751 and $729,749
44 Total Counties/MSA Areas
| 39 counties remain at $417,000 2 counties at $729,750 2 counties at $625,000 1 county at $425,000
44 Total Counties/MSA Areas
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To my surprise – and maybe yours to – as you look up your area, the majority of counties in America have not changed for conforming. FHA did increase their overall limits but not enough to materially benefit most Americans or offer a viable solution to our current crisis.
Here is an example of new loan limits where I live, the Greater Tampa Bay, Florida area. Our 2 counties, Hillsborough (Tampa) and Pinellas (St. Petersburg/Clearwater) have changed some. FHA limits increased to $292,500 but no change for conforming Fannie/Freddie which remains at $417,000. Needless to say, homeowners who need loans over $292,500 and need FHA qualifying guidelines cannot purchase or refinance. Those who can qualify for a conforming loan with a loan amount over $417,000 cannot take advantage of lower, conforming rates. Ironic however, if you live in one of the two areas in the list above you can get either a FHA or conforming loan in the amount of $729,750.
The $729,500 limit is only available in a handful of communities around the country such as Metro New York City and New Jersey, The Metro Washington, D.C. area (D.C., MD., VA., W.V. - W.V?) and parts of California.
But there is good news for those in Guam, Alaska, Hawaii and The U.S. Virgin Islands. Your new loan limits are: $1,094,625.00 for FHA and $1,094,625.00 for Fannie/Freddie. I never realized that Guam and The Virgin Islands had such an impact on our housing crisis. Moral: If you can afford a million dollar mortgage and want conforming rates or need the FHA more liberal guidelines and rates, move to Guam.
All the hype fizzled as far as I am concerned. Basically, we are being told, if you are earning a good living and can afford a more expensive home, you should pay higher interest. If you are earning a good living and already live in a larger home but need conforming rates you can afford to avoid foreclosure, you cannot live there anymore. Your house should be added to that long list of the anticipated 1.8 million foreclosures this year. No help in sight for you. Keep struggling to pay those higher rates if you can and if you cannot, well, you lose and your good credit goes too. Now you can be totally down and out.
Rep. Frank Dodd is proposing to spend $20 millions of your tax dollars to buy foreclosed homes and turn them into subsidized or low income housing. I wonder if he would consider letting the former owner of the house, now in need of subsidized housing, live in their house after foreclosure. Hmmm???
FHA calculates limits based on median home prices in each area. I don’t understand why you should be able to get a higher loan amount in one area versus another. If you can afford the $729,750 in D.C or Virginia you can certainly afford it in Tampa. If you need it to qualify in D.C. why would you not need it to qualify in Tampa? People of Tampa (or Anyplace, U.S.A) should have the same benefits as those in D.C. and more specifically in Guam or The Virgin Islands. (I wonder if they still like mortgage brokers there). A very biased system to say the least.
The amount of tax payer paid dollars spent by our government to come up with this solution would have been better spent on direct relief to the needy. Remember Hurricane Katrina?
The system continues to be broken and the crisis will continue to worsen.
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Foreclosure Crisis, continued
By Larry Rubinoff
February 29, 2008
Be careful what you wish for. An old saying meaning your wishes, good or bad, could come true. My last
wished) for lenders to take action themselves and write down or lower rates on mortgages allowing homeowners to avoid foreclosure.
In an article appearing in American Banker, “Frank Seeks $35B Slate Of Housing Remedies” (link requires subscription), it says, “House Financial Services Committee Chairman Barney Frank is preparing a $35 billion housing package that would expand the government's role in combating the subprime mortgage crisis”. I don’t agree with some of his proposals but I do agree with this one.
“Under Rep. Frank's plan, the existing holder of a mortgage would be required to write down
the loan to a level the homeowner could afford. The write down requirement would not apply to investor-owned and second homes”. Just as I was saying, let the banks and lenders take action on their own, give back some of the windfall profits they made, reduce the rate of foreclosures and allow more people to keep their homes. Logically, what choice do they have? Foreclose and take a continued cash loss with the eventuality of taking an even bigger write down or taking this “upfront” write down, keeping performing loans on the books, maintaining property values and ongoing returns to themselves as well as to the investors who purchased the Mortgage Backed Securities (MBS).
It appears that Rep. Frank has had discussions with Bank of America, itself facing billions in losses, on this very topic and admits that was the source of his suggestion. My question to Bank of America and the many other banks and lenders is, “why must it take an act of Congress for you to make this
decision”?
Win/Win vs. Lose/Lose. That is the decision. With an estimated 1.8 million new foreclosures in 2008 what are they waiting for?
With Recession looming (I believe it is already here), the dollar weakening in world markets and
inflation threatening the basic survival needs of the average American, it appears to me corporate America needs to participate in the downturn as they did in the upturn.
This part of the solution costs our government (our citizens) nothing and has absolutely no participation in any of the $35B proposal. A zero tax payer cost, win/win.
“Rep. Frank is also considering allocating $20 billion of grants and loans for purchasing foreclosed homes at or below market value in an effort to stabilize housing prices and prevent spillover costs from foreclosures”.
This major portion of his recommendation may have some merit. The idea of stabilizing housing prices is important. My problem is when giving “$20 billion” in grants and loans out, it can lead to more problems. Unless these grants and loans are given out to individual homeowners the effect could be even more damaging. That large a sum of money will attract the same large corporations who will use it to their advantage and profit with little or no concern for the average individual. It could possibly lead to more predatory lending and fraud.
"Voluntary lender solutions" could well be a good first step for a problem that history may record
second only to the Great Depression.
What solutions do you, our readers have. Maybe we can compile them and send them on to Rep.
Frank, a unified voice from those affected.
Stay tuned for more on what I call, “Stepping Up To The Pump.”
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